Kalodner, Ganey and Seitz, Circuit Judges.
This is an appeal from a Judgment of the United States District Court, Western District of Pennsylvania, permanently enjoining defendant-appellant, F. M. Sloan, Inc. ("Sloan"), from violating the minimum-wage and overtime provisions, §§ 6 and 7, of the Fair Labor Standards Act of 1938, as amended ("Act"), 29 U.S.C.A. § 201 et seq.,*fn1 and restraining Sloan from the withholding of a total of $2712.11, inclusive of interest, found by the court to be due to five employees as minimum wage and overtime compensation under the Act. The Opinion of the District Court is reported at 285 F. Supp. 669 (W.D. Pa. 1968).
The District Court had jurisdiction over this action pursuant to 29 U.S.C.A. § 217.
The case concerns five employees of F.M. Sloan, Inc.,*fn2 a Pennsylvania corporation doing business only within the state of Pennsylvania. The question presented is whether the District Court erred in concluding that these five employees were covered by the Act and entitled, therefore, to the protection it provides. Sections 6 and 7 of the Act, 29 U.S.C.A. §§ 206, 207, extend its coverage to employees " . . . who in any workweek [are] engaged in [interstate] commerce or in the production of goods for [interstate] commerce . . ." Section 3(j), 29 U.S.C.A. § 203(j), provides that " . . . for the purposes of this chapter an employee shall be deemed to have been engaged in the production of goods if such employee was employed . . . in any closely related process or occupation directly essential to the production thereof . . ."*fn3
During the period relevant to this action, December 13, 1964 to April 17, 1966,*fn4 Sloan was engaged in the production of natural gas from twenty-six wells owned or leased by it, all within the state of Pennsylvania. All of the gas so produced was sold, as required by contractual agreement, to The Peoples Natural Gas Company of Pittsburgh ("Peoples"), a Pennsylvania corporation. The gas was delivered on a continuous, almost daily basis from Sloan's pipeline into a Peoples' pipeline, where it was commingled with much larger quantities of gas produced by Peoples' own wells and those of other producers who sold to Peoples. The District Court found, and it is undisputed, that it would be impossible to trace any particular cubic foot of gas back to its source once it had merged with the other gas in Peoples' pipelines. We agree with the District Court's conclusion that it is not "essential to coverage that any particular cubic foot of defendant's gas should be so traced." D.A. Schulte, Inc. v. Gangi, 328 U.S. 108, 121, 90 L. Ed. 1114, 66 S. Ct. 925 (1946); Mitchell v. Jaffe, 261 F.2d 883, 887 (5 Cir. 1958).
Although Peoples did not sell or deliver gas to customers located outside the state of Pennsylvania, and thus was not directly involved in interstate commerce, it did distribute a large percentage of the gas in its pipelines on a daily basis to the mills of Braeburn Alloy Steel Company at Braeburn, Pennsylvania, and Allegheny-Ludlum Steel Corporation at Brackenridge, Pennsylvania and approximately 95 percent of the gas so delivered was utilized in producing steel products of which 85 to 90 percent was shipped in interstate commerce on a regular basis. It is settled that, under the facts as outlined above, the employees of Peoples, regardless of the nature of the work they performed, would fall within the coverage of the Act because of their engagement in a "closely related process or occupation directly essential to the production" of goods for interstate commerce. See Wirtz v. Idaho Sheet Metal Works, Inc., 335 F.2d 952 (9 Cir. 1964), aff'd 383 U.S. 190, 15 L. Ed. 2d 694, 86 S. Ct. 737 (1966), reh. den. 383 U.S. 963, 86 S. Ct. 1219, 16 L. Ed. 2d 305; Mitchell v. Independent Ice and Cold Storage Company, 294 F.2d 186 (5 Cir. 1961), cert. den., Independent Ice & Storage Co. v. Goldberg, 368 U.S. 952, 7 L. Ed. 2d 386, 82 S. Ct. 394 (1962); Mitchell v. Mercer Water Co., 208 F.2d 900 (3 Cir. 1953), aff'g Durkin v. Mercer Water Co., 112 F. Supp. 656.
In deciding whether the employees of Sloan are covered by the Act, the critical issue is whether the fact that the gas is first sold to an independent "middleman" (Peoples) and then resold to the steel companies sufficiently "insulates" Sloan from the production of goods so that the activities of its employees do not meet the "closely related" and "directly essential to" test.
Since the Supreme Court has ruled that in applying the Act "we focus on the activities of the employees and not on the business of the employer," Mitchell v. Lublin, McGaughy & Assoc., 358 U.S. 207, 211, 213, 3 L. Ed. 2d 243, 79 S. Ct. 260 (1959), the nature of the work done by the employees here involved and its direct relation to the production of gas is critical. The District Court found that employees Schweinsburg, Shaffer, Osloskey and Creighton regularly, on an hourly basis, checked and recorded the readings on various metering gauges on Sloan's pumps and performed routine maintenance services on the machinery, specifically the adding of oil to the pump engines. These activities consumed only a small portion of each work-hour of the employees; but they were performed on a regular and recurring basis. The regularity of these gas-producing activities was viewed as a key factor by the District Court, and it said:
" . . . in my opinion the de minimis doctrine does not apply to regular and recurring work, and such need not be substantial timewise." (citing Wirtz v. Durham Sandwich Company, 367 F.2d 810 (4 Cir. 1966).) 285 F. Supp. at 672.
The remainder of the employees' working time was spent on various tasks connected with the operation of a pine tree nursery and a hothouse owned by Sloan.*fn5
Sloan contends we are bound by this Court's decision in Kaferle v. Fredrick, 360 F.2d 536 (3 Cir. 1966), to conclude that the five employees here in question are not covered by the Act. In Kaferle, suit was brought by four employees to recover amounts alleged to be due them as employees covered by the Act. There, the defendant employer was engaged in the mining of coal within the state of Pennsylvania. All the coal was sold by the defendant to customers within the state, resulting in total sales of $288,725.46 during the relevant period. Of this amount, $2,300 of the sales was to a coal broker, Pape, who, in turn, sold coal to two industrial concerns in Pennsylvania which used it as fuel in the production of goods for interstate commerce. It was contended by plaintiff-employees that, as a result of the indirect sales to producers of goods for interstate commerce, they were "engaged in a 'fringe' occupation which is closely related and directly essential to the production of goods for interstate commerce." 360 F.2d at 538. This court held that there was no coverage under the Act, saying:
" . . . if, in fact, any of appellant's [employer's] coal reached [the producers of goods for interstate commerce], it had to pass through an intermediary, namely, Pape. This alone defeats the requirements that such work must be 'closely related' and 'directly essential', ...